October 24 (SeeNews) - Bulgaria's government said on Wednesday it has approved amendments to the central bank law in accordance with its action plan for joining the Exchange Rate Mechanism II (ERM II) - the eurozone's waiting room, and the EU's Banking Union.
The changes concern the central bank's institutional and functional independence, the government said in a brief statement following its weekly meeting.
The proposed measures also envisage prohibitions on monetary financing and privileged access.
In August, the government adopted the action plan in relation to the country's intention to join the ERM II and the Banking Union by July 2019. The measures in the plan are aimed at strengthening the regulatory framework on banking supervision, improving the macroprudential framework on credit borrowers, strengthening supervision of the non-banking financial sector (pension funds and insurers) and improving the insolvency framework, the government said at the time.
In July, the euro area finance ministers said they would support Bulgaria's intention to join the ERM II after a positive assessment of the ECB but urged the country to adhere to its promises for reforms under the Cooperation and Verification Mechanism (CVM).
"We call on the Bulgarian authorities to thoroughly implement the reforms monitored by the Commission under the Cooperation and Verification Mechanism in the areas of judicial reform and the fight against corruption and organised crime in Bulgaria, in light of their importance for the stability and integrity of the financial system," the finance ministers of the euro area said.
In May, the European Central Bank (ECB) and the European Commission said that Bulgaria is not prepared to join the Eurozone as it does not meet all criteria. The ECB said that Bulgaria should deal with macroeconomic imbalances, and needs to adopt laws to preserve the independence of its central bank BNB, in order to meet criteria for joining the Eurozone.
The European Commission said in its convergence report published together with the ECB's report that Bulgaria does not fulfil the conditions for the adoption of the euro as its legislation, and its law on the central bank in particular, is not fully compatible with the requirements of the treaty on the functioning of the EU.